Top Menu

Friday Roundup

Roundup

Funny headline, just plain silly, new SEC FCPA Unit Chief, parallel, scrutiny alerts and updates, company continues to “boil the ocean,” and ISO 37001 related. It’s all here in the Friday Roundup.

Funny Headline

This Global Investigations Review post contains the headline “Former FCPA Unit Chiefs Defend the ‘Revolving Door’”.

That’s funny. I suppose if I moved from a government enforcement attorney position to a multimillion dollar position in FCPA Inc. defending companies against the enforcement climate I helped create, I might defend the practice as well.

Continue Reading

Scrutiny Alerts And Updates

scrutiny alert

ING

Netherlands-based ING NV, a company with shares listed on the New York Stock Exchange, recently disclosed:

“ING Bank is the subject of criminal investigations by Dutch authorities regarding various requirements related to the on-boarding of clients, money laundering and corrupt practices. ING Groep has also received related information requests from U.S. authorities. ING Groep and ING Bank are cooperating with such ongoing investigations and requests. It is currently not feasible to determine how the ongoing investigations and requests may be resolved or the timing of any such resolution, nor to estimate reliably the possible timing, scope or amounts of any resulting fines, penalties and/or other outcome, which could be significant.”

Continue Reading

Friday Roundup

Roundup

As we say not as we do, scrutiny alerts and updates, and further RIP to the “Arthur Andersen effect.” It’s all here in 200th edition of the Friday roundup.

As We Say, Not As We Do

This previous post highlighted the April Fools’ Day 2015 SEC enforcement action against KBR for its non-existent, theoretical muzzling of individuals in certain employment agreements. According to the SEC, this violated SEC Rule 21F-17, which provides in relevant part: (a) No person may take any action to impede an individual from communicating directly with the Commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement . . . with respect to such communications.”

Continue Reading

Friday Roundup

Roundup2

Scrutiny alerts and updates, guilty pleas, across the pond, and admiration.  It’s all here in the Friday roundup.

Scrutiny Alerts and Updates

Airbus

The largest FCPA enforcement action of all-time (Siemens) began with a raid by Munich law enforcement on company offices.  Will this be the origin of another large FCPA enforcement action?  Reuters reports:

“Munich prosecutors are carrying out an investigation at Airbus’s defence unit over alleged corruption linked to contracts with Romania and Saudi Arabia […] The Munich prosecutor’s office said it was investigating EADS, as Airbus Group was formerly called, over suspicion of paying bribes to foreign officials and tax evasion in connection with business in the two countries. It said a small number of people were under investigation and that material confiscated from searches related to those people and different companies was now being evaluated. Prosecutors searched offices on suspicion that bribes were paid to enable the company to obtain contracts worth 3 billion euros (2.3 billion pounds) in Saudi Arabia and Romania […] Airbus said prosecutors were investigating irregularities in border security projects awarded to Airbus’s defence business, but declined to confirm details.”

Airbus has American Depositary Receipts that trad on U.S. exchanges.

Och-Ziff Capital Management Group

The Wall Street Journal recently reported:

“U.S. investigators probing Och-Ziff Capital Management Group LLC’s  dealings in Libya are focused on a multimillion-dollar payment by the big hedge-fund firm they believe was funneled in part to a friend of Col. Moammar Gadhafi’s son, said people briefed on the inquiry. The scrutiny is part of a broad, three-year foreign bribery investigation by the Justice Department and Securities and Exchange Commission into how Wall Street firms obtained investments from the regime of the former dictator, who was deposed and killed in the country’s 2011 revolution. A key part of the Och-Ziff investigation relates to a fee that Och-Ziff paid to the company of a London middleman for help winning a $300 million investment in Och-Ziff funds from the Gadhafi regime, the people briefed on the matter said.”

Petrobras

In Petrobras-related news and further to “Foreign Corrupt Practices Act Ripples,” Reuters reports:

“State-controlled oil company Petroleo Brasileiro SA and its top executives face a class-action lawsuit in a federal court in New York over an alleged contract fixing, bribery and kickback scheme that lawyers say inflated the value of the company’s assets. The suit was filed by law firm Wolf Popper LLP in the Southern District of New York on Monday on behalf of investors who bought U.S.-traded shares of the Brazilian company, commonly known as Petrobras, between May 20, 2010, and Nov. 21, 2014. […] The complaint alleges that Rio de Janeiro-based Petrobras “made false and misleading statements by misrepresenting facts and failing to disclose a culture of corruption at the company that consisted of a multi-billion dollar money-laundering and bribery scheme embedded in the company since 2006.”

Guilty Pleas

As highlighted in this prior post, in April 2014 two additional individual defendants (Benito Chinea and Joseph DeMeneses, the Chief Executive Officer and a Managing Partner, respectively of Direct Access Partners) were added to the FCPA (and related) enforcement action against individuals associated with broker dealer Direct Access Partners.  (See here for the original May 2013 enforcement action against Jose Hurtado and Tomas Clarke and here for an additional individual, Ernesto Lujan, being added to the enforcement action in June 2013). Like in the previous enforcement actions, the additional defendants Chinea and DeMeneses  were criminally charged in connection with alleged improper payments to Maria Gonzalez (V.P. of Finance / Executive Manager of Finance and Funds Administration at Bandes, an alleged Venezuelan state-owned banking entity that acted as the financial agent of the state to finance economic development projects).

The DOJ recently announced that:

Chinea and DeMeneses pleaded guilty to one count of conspiracy to violate the Foreign Corrupt Practices Act and the Travel Act.  Chinea and De Meneses have also agreed to pay $3,636,432 and $2,670,612 in forfeiture, respectively, which amounts represent their earnings from the bribery scheme.  Sentencing hearings are scheduled for March 27, 2015.

In the release, DOJ Assistant Attorney General Leslie Caldwell stated:

“Benito Chinea and Joseph DeMeneses are the fifth and sixth defendants to plead guilty in connection with this far-reaching bribery scheme, which ranged from Wall Street to the streets of Caracas. The guilty pleas and the forfeiture of assets once again demonstrate that the Department is committed to holding corporate executives who engage in foreign bribery individually accountable and to deny them the proceeds of their corruption.”

Across the Pond

Alstom-Related Charges

The recent FCPA enforcement action against Alstom and related entities was just one prong of the enforcement action.

The enforcement action also involved a United Kingdom component as the Serious Fraud Office announced charges against Alstom Power Limited, Nicholas Reynolds, and John Venskus for violating section 1 of the Prevention of Corruption Act 1906 and conspiracy in violation of section 1 of the Criminal Act 1977.

The charges were based on the following allegation.

Alstom Power Limited, Nicholas Reynolds, John Venskus and others, between February 14, 2002 and March 31, 2010 “did corruptly give or agree to give an official or officials or other agents of AB Lietuvos Elektrine, gifts or consideration, namely money, disguised as payments in respect of a Consultancy Agreement with Vilmentrona UAB as an inducement or reward for showing favour to the Alstom Group in relation to the award or performance of a contract between Alstom Power Limited and said AB Lietuvos Elektrine for the Low NOx Burners project at the Elektrenai Power Plant in Lithuania.”

See here for Alstom’s January 2012 release regarding the project.

According to a SFO release, “Alstom Power Ltd, Nicholas Reynolds and John Venskus’ case has been formally sent from Westminster Magistrates’ Court, for a Preliminary Hearing at Southwark Crown Court on 5 January 2015.”

Smith and Ouzman Ltd., et al

Earlier this week, the SFO announced:

“Smith and Ouzman Ltd and two employees were convicted today at Southwark Crown Court as a result of a Serious Fraud Office investigation into corrupt payments made for the award of business contracts to the company.  The corrupt payments totalling £395,074 were made to public officials for business contracts in Kenya and Mauritania. The company, Smith and Ouzman Ltd, a printing firm based in Eastbourne which specialises in security documents such as ballot papers and certificates, was convicted of three counts of corruptly agreeing to make payments, contrary to section 1(1) of the Prevention of Corruption Act 1906. Christopher John Smith, former chairman of Smith and Ouzman, age 71, from East Sussex, was convicted of two counts of corruptly agreeing to make payments. Nicholas Charles Smith, former sales and marketing director of Smith and Ouzman, age 43, from East Sussex was convicted of three counts of corruptly agreeing to make payments. Timothy Hamilton Forrester, former international sales manager of Smith and Ouzman, age 57, from East Sussex was acquitted of all three counts of corruptly agreeing to make payments. Mr Abdirahman Mohamed Omar, a sales agent for Smith and Ouzman, age 38, from London, was acquitted of one count of corruptly agreeing to make payments in relation to a contract in Somaliland.”

Director of the SFO, David Green commented:

“This is the SFO’s first conviction, after trial, of a corporate for offences involving bribery of foreign public officials. Such criminality, whether involving companies large or small severely damages the UK’s commercial reputation and feeds corrupt governance in the developing world. We are very grateful to the Kenyan authorities for their assistance in this case.”

Sentencing is due to take place on 12 February 2015.

Anti-Corruption Plan

The U.K. government recently released this “Anti-Corruption Plan.” It is described as “bring[ing] together, for the first time, all of the UK’s activity against corruption in one place.”

The pamphlet-style document is so general in nature, it is difficult to offer any constructive comments.

Admiration

My admiration for Judge Jed Rakoff (S.D.N.Y.) continues.

In this recent piece titled “Why Innocent People Plead Guilty,” Judge Rakoff writes:

“The criminal justice system in the United States today bears little relationship to what the Founding Fathers contemplated, what the movies and television portray, or what the average American believes. To the Founding Fathers, the critical element in the system was the jury trial, which served not only as a truth-seeking mechanism and a means of achieving fairness, but also as a shield against tyranny. As Thomas Jefferson famously said, “I consider [trial by jury] as the only anchor ever yet imagined by man, by which a government can be held to the principles of its constitution.” The Sixth Amendment guarantees that “in all criminal prosecutions, the accused shall enjoy the right to a speedy and public trial, by an impartial jury.” The Constitution further guarantees that at the trial, the accused will have the assistance of counsel, who can confront and cross-examine his accusers and present evidence on the accused’s behalf. He may be convicted only if an impartial jury of his peers is unanimously of the view that he is guilty beyond a reasonable doubt and so states, publicly, in its verdict. The drama inherent in these guarantees is regularly portrayed in movies and television programs as an open battle played out in public before a judge and jury. But this is all a mirage. In actuality, our criminal justice system is almost exclusively a system of plea bargaining, negotiated behind closed doors and with no judicial oversight. The outcome is very largely determined by the prosecutor alone.”

Job Opening

Sig Sauer Inc. (based in Newington, NH) is actively looking for an Associate General Counsel and Chief Compliance Officer with corporate compliance experience. If interested, please contact Jeff.Chartier@sigsauer.com.

*****

A good weekend to all.

 

Friday Roundup

The cheerleaders fume, quotable, scrutiny alert, and for the reading stack.  It’s all here in the Friday roundup.

The Cheerleaders Fume

In the SEC’s failed enforcement action against Mark Jackson and James Ruehlen, the SEC was forced to carry its burden of proof in the context of an adversarial proceeding.  This should be celebrated as evidence that the rule of law worked.

Yet, to the cheerleaders of more FCPA enforcement regardless of enforcement theories or quality of evidence, the end result of the SEC’s failed enforcement action is something to fume about.  (See here).

Four words come to mind.  Silly, just plain silly.

Quotable

From Robert Amsterdam (here)

“My law firm has counselled entrepreneurs who have seen their companies needlessly gutted by their own lawyers, who in an act of self-preservation turn themselves into appendages of the state to work against their own clients. Even worse, we’ve seen courts seize property for years with little regard for the personal impact on the owners, while others have spent the majority of margin on FCPA compliance costs, leaving little motivation to run their business.

This is all possible thanks to the culture being spread by the war on wealth — we have been so eager to hand over vast powers to regulators and rapidly diminish the rights of those who stand accused, trusting in the flawless execution of the fight against graft and fraud.

There is such a tremendous distrust of the wealthy that politically ambitious prosecutors seek out opportunities for advancement rather than enforcement of the law. The victims tend to be individuals — not the behemoth banks who knowingly traded on debt and credit default swaps, not the industrial giants with decades of experience in bribery, nor the corporate quasi-state bodies that leech off subsidies.

Means to an end

The fight against corruption is important and commendable, and the drive to achieve greater income equality bears an undeniable moral truth. But the way we go about achieving these goals must be intelligent. Rights and due process must continue to be strong throughout the administration of justice. Then expanding opportunities for all, rather than depriving them from some, will put our society back on track for success.”

Scrutiny Alert

GPT Special Project Management Ltd, a unit of Airbus, has been under scrutiny August 2012 (see here).  The Wall Street Journal reports here:

“Airbus Group NV said … that the U.K.’s Serious Fraud Office has contacted some of its current and former employees, as well as U.K. defense ministry officials, in a long-running corruption probe into activities at one of its units. Airbus “understands that four former and current employees were recently interviewed, along with MOD [Ministry of Defence] officials, as part of a wide-ranging SFO investigation,” a spokesman said by email. The U.K.’s anticorruption regulator has for roughly two years investigated GPT Special Project Management Ltd., an Airbus unit that works with the U.K.’s defense ministry, regarding allegations relating to its business in Saudi Arabia.”

Reading Stack

See here for Gibson Dunn’s mid-year FCPA update.

“The Ruehlen and Jackson settlements, earned only after two years of hard-nosed litigation that brought the parties to the brink of trial, demonstrate that those who are willing to put the Government to its burden of proof can come out materially better for their efforts.”

See here for Gibson Dunn’s mid-year update on corporate NPAs and DPAs.

“As the debate continues over whether and how to punish companies for unlawful conduct, U.S. federal prosecutors continue to rely significantly on NPAs and DPAs.  […]  During the first half of 2014, DOJ entered into 11 agreements to resolve a variety of alleged conduct spanning multiple DOJ divisions and sections.  The SEC entered into one agreement.  Of the 12 agreements total, 5 were NPAs and 7 were DPAs.  This figure is in line with the 12 agreements reached in the first half of 2013.  In past years, we observed the phenomenon of an uptick in NPAs and DPAs during the second half of the year, so we anticipate that this year’s tallies could match or exceed the 2013 figure of 27 agreements.”

*****

A good weekend to all.

Powered by WordPress. Designed by WooThemes